Jumpstarting the Jersey Economy through Greater Black Business and Professional Inclusion

(Keynote presentation made to the African American Chamber of Commerce of New Jersey, The State of Black New Jersey Conference, April 16, 2015) 

When most of you learned that your keynote speaker was a Philadelphia businessperson, I suspect that you may have been curious… and, maybe, a little disappointed.

It was probably fair to be curious as to how a person born in North Central Philadelphia and educated at a Catholic grade school and a Jesuit Prep School, in Philadelphia, could possibly shed any light on today’s broad topic – The “State of Black New Jersey.” It was also probably difficult to comprehend how this would all work when you were informed that that same person then went on to graduate from St. Joseph’s University, and Temple University, to work at the old First Pennsylvania Bank and, then, to launch his own branding and marketing firm – all in Philadelphia.

Because I understand that a few of you may still be harboring such feelings, I thought it might make sense, at the outset, to share with you just a few of my personal “New Jersey connections.” You’ve heard the term “street cred?” Well, I thought you should know a bit about my “New Jersey State Cred,” before I begin my few remarks on this afternoon’s critically important topic.

Let me begin by sharing with you that I come from a very close family whose members, in the main, lived in two places---Philadelphia, Pennsylvania, and Harlem, New York...my Aunt Marie lived at 135th and Lennox Avenue and my grandmother's sisters, Aunt Ruth and Aunt Edith, lived at 157th and St. Nicholas.

My grandmother was an employee of what eventually became known as Amtrak. It was called the Pennsylvania Railroad, back then, of course. My grandmother didn’t have a great deal of formal education, nor any university degree, at all.  In fact, she was very much a blue collar worker, at 30th Street Station, in West Philadelphia, where she ran the elevators, and swept and mopped that huge terminal floor, every day.

As part of her compensation for that inglorious occupation, she was given a “pass,” by the train company, which entitled her to travel free, and to take her young grandson, along, for the same price, to destinations relatively close to Philadelphia.

Hence, as a very young boy, I spent a lot of time on those old trains, gazing out the windows as the locomotives whizzed through the state of New Jersey.  I still remember most of the station stops – Trenton, Elizabeth, Perth Amboy, Princeton Junction, New Brunswick, and Newark.

I remember being especially interested in the Trenton Station and having the opportunity to see, each way, during the trip, the huge lighted sign on the side of the “Lower Free Bridge,” as the train approached the city. That was the sign that informed us that “Trenton Makes and the World Takes.”

That was absolutely my first indication that there was a manufacturing economy in the state of New Jersey, or anywhere else.

I hate to admit it, but it always made me wonder exactly what it was that Trenton was making. My grandmother couldn’t answer the question, but, even as a seven-year-old, I got the impression that there were people in that City of Trenton who were working SOMEWHERE, making SOMETHING, that the rest of the world wanted to buy. I was impressed by Trenton.

Who knew, back when I was reading the sign about Trenton making stuff, that, between 1990 and 2014, N.J. would lose nearly 284,000 manufacturing jobs. As you know, the hope for replacement of those jobs is in the area of technology-based, “advanced manufacturing,” which employs 120,000 and has contributed $17 billion to the NJ economy in 2010, alone. But I digress…

Once I received my bachelor’s degree, I wound up, again, in New Jersey. This time, I wasn’t sight-seeing and reading signs from train windows. This time, I volunteered to defend the lives of every citizen of this state when, I joined the New Jersey National Guard’s 112th Headquarters Artillery Battery, in Cherry Hill. I protected you and your families in that role for six years, serving as a fire direction computer for heavy artillery. It was challenging. I hope you appreciated the hard work I did in that capacity for the residents of the Garden State, even though I was, and still am, a lifelong Philadelphian.

Several years later, I was back in New Jersey. This time, I had been recruited to serve as a member of the board of the Claridge Casino Hotel, from 1995-2000, right before its acquisition by Bally’s. During that period, I learned a great deal about the casino industry and about the people of Atlantic City. At the same time, the state’s Casino Control Commission also learned a great deal about ME because, as a potential board member, I had to submit to a thorough, personal investigation, as a prelude to licensing. It was one of the longest, most arduous processes I’ve ever experienced. Let me say this about the NJ Casino Commission vetting process: Once you emerge successfully from that, being approved to serve as a member of the U.S. Supreme Court should be a breeze.

Still on the subject of New Jersey credentials, did I mention that I have a brother named Morris, who moved to Paterson NJ, years ago, to serve as school psychologist at East Side High School?

Did I also mention that I currently live on Penns Landing, on the PA side of the Delaware River, and that from my front window, I look across the river and keep an eye on the “activities” in Camden, every single day? Did I mention that? 

I hope that you’re now feeling a great deal more comfortable with my role, this afternoon.

With all of that as background, let’s move to today’s theme: “The State of Black New Jersey” and a discussion of how we can collectively foster relations among the private and public sectors and black businesses, to enhance New Jersey’s economic effectiveness.

What struck me as I thought about the business case for including African Americans more effectively in the New Jersey economy was this: The State of New Jersey seems to have significant untapped economic power available in the 1.3 million black residents who comprise about 14.7 percent of its statewide population.

Within that population, there are 60,300 black-owned businesses. While we’re digesting that information, we should know that, over the period of the last published Economic Census, ending in 2007, employment at black-owned firms increased by 22 percent, and black businesses across the U.S. employed 921,000 people, with an aggregate payroll of $23.9 billion.

This potential job-creation asset clearly should not be ignored within the state of New Jersey, wherein the unemployment rate, as of February 2015, was 90 basis points worse than the overall U.S. jobless rate, and represented the 19th worst state unemployment rate in the country. That kind of potential also shouldn't be overlooked in a state with just the 36th-best home ownership rate. 

Although the Garden State's numbers are aggregated to describe a single, statewide economy, there really are two very distinct economies within the state, itself--one, whose participants tend to be predominantly white, suburban, highly educated and exceptionally well-compensated; the other, comprised of residents of the state’s largest cities, who tend to be overwhelmingly black and Hispanic, who have relatively low economic achievement and whose high poverty and crime rates are nationally significant.

For example, while New Jersey's population, as a whole, is 14.7 percent black, the black population in the 10 largest cities is much higher, at 34 percent. While 17.7 percent of all New Jersey residents are Hispanic, the Latino population in those same 10 largest cities is 45.4 percent. On the other hand, while Asians are 8.3 percent of the state's residents, they’re just 5 percent of the population in the 10 largest cities; and while whites are 59.3 percent of the overall state population, they’re just 16.1 percent of the population in the 10 largest urban communities.

It’s clear that, in New Jersey, either whites and Asians are precluded from living in the large municipalities, or that blacks and Hispanics are excluded from living in the surrounding suburbs. Somehow, in the main, blacks and whites, simply don’t live near one another. In fact, 34.3 percent of the state’s 1.3 million blacks live in just 10 of the state’s 565 municipalities. That, I would offer, makes it relatively more difficult to do business together.

On its face, those circumstances take on the appearance of economically driven residential segregation. It's painfully clear that, in order to jumpstart their economy through more effective and inclusionary policies, Jerseyites will have to begin to talk more to each other, to develop a greater understanding of one another and, finally, to take meaningful steps toward doing business together. The simple lack of proximity, however, will be an issue.

While we’re discussing the upside to economic inclusion, those who might be concerned about public safety and crime in black and diverse communities, should give some thought to Blake Taylor’s 2006 study on Poverty and Crime. Among the report’s findings were evidence that a one percent increase in poverty leads to a 2.16 percent increase in total crime; that homicides are disproportionately concentrated in areas of poverty, and, finally, that: “The offer to relocate families from high to very-low poverty neighborhoods, i.e., census tracts with poverty rates below 10 percent, reduces juvenile arrests for violent offenses on the order of 30 to 50 percent of the arrest rate.”

In that regard, it should be of great interest to us, today, that nine of New Jersey's 10 largest cities have poverty rates that are substantially, embarrassingly, higher than that 10 percent threshold. Most notable are cities such as Camden, Passaic, Paterson and Newark, where the poverty rates are 39.8, 30.3, 29.1 and 29.1, respectively.

So, it would seem that the mandate to improve the economy in New Jersey's urban areas goes far beyond any outdated concepts of affirmative action or equal opportunity. This is not some charitable, morally "right thing to do" exercise. No, this is "enlightened self-interest" for an economy whose population, statewide, is now, about 44 percent comprised of people of color. Beyond the obvious economic benefits that would accrue to the State, this is also a strategy for reducing crime, creating aspirations, saving lives and improving the quality of life.

The recommended approach is much the same as how European immigrants were eventually absorbed into the mainstream economy, 70 years ago, leading to better jobs, improved business opportunities, reductions in crime rates in their neighborhoods and, eventually, access to improved housing, in leafy suburban communities.

However, to get to where we should all want to wind up in this regard, we'll have to recognize that current patterns of race-based exclusion are still doing significant damage to the American people and that they extend well beyond residential issues and deep into the very fabric of the U.S. economy, and the New Jersey economy.

It's interesting to note, for example, that the state of New Jersey and the U.S., as a whole, have virtually the same percentages of persons in their populations who are under the age of 5, who are under 18, and who are 65 and over.

In addition, and more to the point, both have about 14 percent black populations, both have Hispanic populations in the 17 and 18 percent range, and both report single-digit Asian populations. Also of great interest is the fact that, while 7.1 percent of all U.S. businesses are black-owned, 7.7 percent of New Jersey firms have black ownership.

New Jersey also slightly surpasses national averages for Hispanic-owned and Asian-owned firms, and has virtually the same percentage of woman-owned firms as the country, as a whole, at 27.3 percent. These strikingly similar data make New Jersey an ideal place for conducting the definitive case study for how the U.S. can take steps to include persons and businesses of color into its own mainstream economy.

New Jersey can, if it chooses to, take the national lead in this area, as the federal government has seemed reluctant to do so, for far too long.

Let's get back now to a discussion of the "other New Jersey economy," the one with the high incomes, fine homes and nation-leading household income levels. With its proximity to New York City and Philadelphia metros, New Jersey is much more prosperous, on a per-capita basis, than the U.S., as a whole.

Those with bachelor’s degrees or higher, for example, constitute 26 percent of the national population. For New Jersey, those degree holders are 35.8 percent of all residents. Median household income for the U.S. is $53,046, but for New Jersey, despite its poverty-stricken big cities, median household income is $72,629, the second-highest in the entire nation.

So, now that we see where the opportunity lies, and what has already been achieved in the New Jersey mainstream, let's benchmark the challenges faced by black businesses, both nationally and, here, in the State.

We'd have to begin by recognizing the black economy's importance to New Jersey, even in its current, less-than-widely-supported condition. For example, given its current spending power of roughly $1 trillion, Black America would rank 22nd in the world among 182 national economies. Its spending power is greater than that of the Netherlands, Colombia, Venezuela, the UAE, Belgium, Iraq, Sweden, Singapore, Portugal, or Ireland, among others.

How can U.S.-based firms, including those in N.J., rationally ignore such economic potential, sitting virtually under their profit-driven noses?

Curiously, Nielsen Research reported in November 2013, that even though 14 percent of Americans are black, only 3 percent of major media advertising spending is focused on them. National advertisers seem to have missed the boat, entirely, with regard to the profit potential in black consumer markets, even at currently depressed levels. Let's hope New Jersey-based businesses "wake up and smell the coffee." There’s opportunity to be gained, competitive advantage to be won, profits to be realized.

Not only has the U.S. business community seemingly lost interest in selling goods and services into the black community, those same companies continue to underutilize the professional services available from black-owned firms.

Despite the fact that the number of black-owned New Jersey firms increased by 72 percent, versus the 13 percent national average, over the period of the most recently published economic census, those black firms, on average, grossed just $72,000 on an annual basis. That compares to the $179,000 generated by Jersey-based Asian and Hispanic firms, and the $490,000 in average gross receipts realized by the state's mainstream firms.

It's difficult to argue against the point that business growth generally fuels job creation. In 2013, while it underutilized black and other diverse businesses, the State saw its private sector employment increase by just 1.4%, well below the 2.1% national average.

So, clearly, there’s work to do:

• First of all, elected leadership in New Jersey should encourage the private sector to do more to extend its annual volume of procurements of goods and services with black-owned, and other minority, businesses. It should be, both, an economic and political agenda item.

• On the business-to-business side, no small business can survive without contracts from large private-sector procurement decision-makers. The greatest business plan, the most highly educated business owner, the most well-designed services or well-packaged products don’t matter, unless the small, minority business can generate cash flow. As Peter Drucker once famously said, “Nothing happens in business until someone sells something.”

• Yet, in a 2010 study of diversity practices at Fortune 500 Companies, researchers found that: 
• Black/Africa-American firms represented only 2.58 percent of total procurement, that 
• Hispanic/Latino firms represented 2.69 percent, and that 
• Asian firms were 3.2 percent of contract revenues.

Even worse, 118 out of 219, or 53.8 percent, of the Fortune 500 respondents chose to not even answer the survey's questions about supplier diversity, or said they do not track such data, at all. As we all know, those things that don't get measured or monitored don't really matter in politics or in the business community.

If that kind of mean-spirited, self-defeating approach to the growth of minority businesses exists in large New Jersey corporations, it must stop, and stop soon.

• In addition, Corporate New Jersey, like all of Corporate America, needs to do a significantly better job in recruiting African-American board members and executive managers. In 2010, according to the same Fortune 500 survey, blacks, nationwide, comprised just 4.23 percent of the members of executive management teams. 

• Executive management. Isn't that where the ultimate hiring and procurement decisions get made in the business environment? That’s clearly an area for development.

• There's also work to do within the black community, itself, beginning with the black religious community. If it's true that charity begins at home, so does support for small businesses. Regrettably, the perverse cultural history of this country has taught black consumers that they, too, ought to ignore the goods and services of black businesses, no matter how superior or convenient they may be, as compared to their mainstream competitors. There’s a regrettable, but true, old saying in the black community, one which black folks have been taught to believe, that says: "the white man’s ice is colder and his sugar is sweeter."

• How does the black community move toward eliminating it's own, self-destructive economic behaviors?
• A good place to start is the 2008 Pew Religious Landscape Study, which disclosed that, as compared to other religious traditions, 85 percent of congregants of historically black churches believe “religion is important in one’s life.” That feeling about religious guidance exceeded all but Jehovah’s Witnesses (86%), and it compares to national religious dependency levels of 56% for Catholics, 31 percent for Jews, 72 percent for Muslims and 35 percent for Buddhists.  

• Given these data, there's a role for the highly influential black church pastors to play in creating respect and promoting patronage for black businesses, in New Jersey, and across the country. In addition to stressing the importance of this effort from their pulpits, black ministers can establish protocols for tracking purchases from businesses within their own congregations, and throughout their local communities. 

• The nation’s African-American businesses generated $137 billion in annual revenue, including small amounts from mainstream purchases, according to the U.S. Census Bureau. Yet, African-American spending power is estimated at about $1 trillion. Where are black consumers spending that additional $863 billion, each year, if not with black-owned businesses? According to recent census data, African Americans spend just 7 cents out of every dollar at a black-owned business. While that's a much higher level than the expenditure rates by large, mainstream, corporations, it's still embarrassingly low, and has to change, too, if black businesses are to achieve full potential and have significant beneficial impact on the mainstream New Jersey economy. The Black Church should be joined in this effort to impact black purchasing patterns, by black media outlets.

• Next, universities must play a heightened role, through partnerships with public sector leaders, to produce branded training programs for those seeking employment. They should also review their economics and political curricula to ensure that the “inclusion business case” is appropriately reflected. Statewide media must accept the “improved relationship” theme as part of an imperative for editorial agendas, assuming they want the strengthened New Jersey economy and improved quality of life that would result. 

• Additionally, the African American Chamber, working together with public and private-sector leaders should take steps to update and enhance a central African-American business owners database. Such information would be utilized by both consumers, and businesses seeking vendors. This all-inclusive, online portal, which would have implications for use as a mobile application, would gather, update and disseminate information about black businesses, across all industry sectors. 

• For example, the website www.blackownedbiz.com, claims to have more than 10,000 businesses listed on its site, including firms from 58 New Jersey cities and townships. The challenge for sites such as this one, and others like it, is their inability to provide timely updates of business listings, and the fact that they don’t proactively forward potential black business leads to interested parties. 

• An expanded database, managed and promoted by the Chamber, would bring additional credibility and effectiveness to such sites and would remove, once and for all, the time-worn excuses, by businesses and consumers, that they WOULD have used a black architect, plumber, or chef, but they just couldn’t find one.

• Finally, leaders at large publicly traded, New Jersey-based corporations must expand their views beyond the short-term focus on margin and begin to think, also, about the long-term benefit that would accrue to their businesses and communities through providing increased levels of contract opportunities to black and minority businesses, and management-level career positions to Jersey-based black executive talent. A good place to start would be the completion of community-wide, geo-coded, procurement audits, designed to uncover where and with whom corporations are choosing to spend their budget dollars, and how those decisions are impacting the broader New Jersey economy.

Such an initiative would constitute a long-overdue transition from “fiscal-only” imperatives for procurement budgets, to a greater recognition for the need to have those expenditures also reflect the opportunity to have expanded economic impact, into the State's dramatically marginalized black and Hispanic communities. 

Clearly, the greatest beneficiary of providing access to full economic inclusion to ALL New Jersey residents will be the Garden State, itself.

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